Cost Cutting Drives Dillard's to Profit

Inventory reductions and improved gross margins helped Dillard's nearly triple its profit in the first quarter.

The 315-unit department store company posted net income of $7.7 million, or 10 cents per share, for the quarter ended May 2, vs. $2.7 million, or 4 cents per share, in last year's first quarter.

The 2009 results included $900,000 after-tax gain related to note repurchase as well as $600,000 in asset impairment and store closing charges.

Sales fell 16% to $1.47 billion, with comps off 13%.

Dillard's cut inventory 18% compared to the year-ago period, driving down comp store inventory by 17%. At the same time, merchandise gross margin improved by 150 basis points.

"We will continue to maintain our conservative fiscal posture while focusing on further improving our merchandise assortments to position Dillard's well for the long term," said ceo William Dillard II.